Molina Healthcare, Inc. (MOH) reported third-quarter earnings of $0.33 per share, which was well below the Zacks Consensus Estimate of $0.53. The company earned $0.60 in the year-ago quarter.
The decline in profit for the quarter was attributable to higher operating expenses coupled with losses from the company’s California health plan. The increase in medical costs was attributable to the H1N1 flu virus and costs associated with recently enrolled members. The impact of the H1N1 epidemic is significant and has the potential to worsen in the coming quarters.
We are also concerned about the intense competition facing Molina. We have an Underperform rating on the stock with a price target of $19.Zacks Investment Research
